Blog

Social Enterprises Need To Be More Transparent

The problem for social enterprises with transparency is simple. Driven by a scarcity of funding, we feel compelled to tell ever more hard-hitting stories about the beneficiaries we serve, rather than balancing this storytelling with hard facts about the actual impact we achieve (or don’t).

I believe we have reached the pinnacle of this storytelling culture. This was epitomised with the collapse of Kids Company, who were seemingly built only on good stories with very few ‘facts’ to back them up.

This needs to change.

We need to balance good storytelling with hard facts, even if the hard facts don’t always tell a good story. If social enterprises are truly focused on those who need our services the most, then we have to accept that sometimes our work is really difficult and it doesn’t always get the results we want. We have a duty to tell this story, talking about what we do, as well as what we DON’T DO accurately and transparently.

Part of the problem is that public sector commissioners often pay under ‘payment by results’ contracts – only paying for successful outcomes. Also, there is often an expectation that providers will add greater value than stated in the contract. Without strict control this can actually reduce the ability of social enterprises to take risks and work with those people who need our services the most.

Many social enterprises think they are measuring their impact by reporting huge numbers of people they have ‘helped’. But what does ‘helped’ actually mean? Is it just saying hello to someone or does it mean truly making a change in that person’s life? This is where the culture of telling a good story has unfortunately taken over from transparent, accurate, impact reporting.

Let’s take a very measurable outcome, like getting someone a job. In many ways it is a binary ‘on or off’ outcome because that person will either get a job or they won’t, right? Well, yes to an extent, but unfortunately that is where many organisations stop – they just tick the box and report that they have helped someone get an outcome.

We don’t actually know anything about that person and whether they truly needed the help of the social enterprise. What if the person who got the job was actually a university graduate with no socio-economic barriers the day before? Let’s say the organisation helps them get a job, which is all good, but then they walk out of it the next day. In the current culture the box is still ticked, one job outcome recorded, regardless of whether they genuinely needed help and the longer-term impact.

Not good enough.

Outcomes are sometimes hard to measure, but not impossible. The softer the outcome (like improving someone’s self-esteem, for example), the harder it is to measure. Even the easier to measure outcomes, like whether someone got a job, can also prove tricky – hence the need for more transparency and openness.

Let’s go back to our job outcome. To fully understand what is going on, we need much more information to determine whether we are genuinely making a difference. We need to know whether the person we have helped needed it and what long-term change we actually made in their lives.

I am CEO of a charity called Street League – we are the UK’s leading Sport for Employment Charity. We have been fortunate enough to work with Impetus-PEF and Inspiring Scotland (the UK’s top Venture Philanthropy organisations) over the past seven years, who have pushed us hard to develop transparent impact measurement. We have been on a three-stage journey.

Pre-2010 we used to just measure ‘participation’ – the number of people who took part in our sessions. We stopped that and moved to an outcomes based model, very much like the one I outline above – ticking the box when we achieved a job or training outcome. That was better, but still a long way from the transparency we wanted.

Three years ago we introduced a new system which tracked the whole journey of the young person; from the moment we met them, right through to helping them stay in a job for six months or more. We examined where the young people were coming from, including the barriers they faced, and introduced a rigorous internal audit that required every outcome we achieved to be validated. Now a job outcome is only valid once we have a photocopy of a first month’s pay slip or a job offer letter.

Last year we presented all of this information in our most transparent Annual Report to date, which is available here. We devoted the first section to talking about everything we didn’t get right, before we go on to talk about what we did get right. It has not been easy and we still have a way to go, but full data clarity has enabled us to throw a spotlight on our model, learn from our mistakes and change things so we can better serve our beneficiaries.

There have been many attempts to produce a unified measurement system for the third sector. These virtuous attempts have usually ended in too high a degree of complexity to make them workable. I believe there is a more straightforward and simple alternative.

All social enterprises should agree to three high-level rules for reporting, which would kick start a revolution in transparency. At Street League we call these our ‘Three Golden Rules’:

Never over-claim what you do

All percentages must include absolute numbers

All outcomes must be backed by auditable evidence

Participants at the E3M members’ Away Day recently signed up to the principles, which is brilliant, but we need more organisations to do the same if we want to truly change the way the sector talks about the impact we are reporting. If we all started with this, transparency will follow. Support our campaign for greater transparency on Twitter using the hashtag #CallForClarity.